Republicans Say Warren Misstated CFPB Role in Mortgage Talks

March 30 (Bloomberg) -- U.S. Representative Spencer Bachus
asked White House adviser Elizabeth Warren whether she’d like to
clarify or correct March 16 testimony about foreclosure
settlement talks between the Consumer Financial Protection
Bureau and state attorneys general.

Bachus, the Alabama Republican who leads the House
Financial Services Committee, made the offer to Warren, who has
been charged with setting up the bureau, in a letter today.

Bachus suggested that her remarks to Congress conflicted
with a Feb. 14 presentation the CFPB made to Iowa Attorney
General Tom Miller. A seven-page PowerPoint document prepared
for the presentation was released earlier this week. According
to the document, a CFPB analysis concluded that a $5 billion
penalty would be “too low,” and banks could afford more.

“The recently disclosed documents suggest that rather than
merely dispensing advice to those involved in negotiating the
settlement, the CFPB was actually its primary architect,”
Bachus and Representative Shelley Moore Capito, a West Virginia
Republican who leads a Financial Services subcommittee, wrote in
the letter sent today.

Jen Howard, a spokeswoman for the Consumer Financial
Protection bureau, said in an e-mailed statement that the agency
“provided advice to various officials involved in the mortgage
servicing law enforcement matter.”

‘Not Everyone Agrees’

“She is aware that not everyone agrees with that advice or
how to address the serious deficiencies at some of the nation’s
largest mortgage servicing firms,” Howard said in the
statement, referring to Warren.

Capito said in an e-mailed statement that the letter gives
Warren a chance to correct the record. “Many of my colleagues
and I are concerned that the CFPB may have acted
inappropriately,” Capito said.

At the March 16 hearing, Warren emphasized that it “would
not be right” to comment on the negotiations since they are a
law enforcement matter.

In one exchange during the hearing, Bachus asked whether
Treasury Secretary Timothy F. Geithner sought Warren’s input on
“how to structure” the settlement. Warren responded that Geither
had “asked for advice about the ongoing problem we have with the
mortgage servicers.”

Geithner told eight members of Congress in a March 15
letter that he had invited officials from the consumer bureau to
“advise” on how to design mortgage servicing standards.